South Korean officials have revealed a major international cryptocurrency crime involving the laundering of approximately 150 billion won, equivalent to approximately $101.7 million, through an unauthorized currency scheme.
The Korea Customs Service (KCS) announced on Monday that three Chinese nationals have been referred for prosecution for alleged violations of the Foreign Exchange Transactions Act.
Massive cryptocurrency money laundering scheme
Local media reports have pointed out that between September 2021 and June last year, the suspects allegedly laundered their money by allegedly manipulating both domestic and international cryptocurrency accounts in conjunction with Korean bank accounts.
According to the KCS, the criminal activities were disguised as legitimate expenses, including cosmetic surgery fees for foreigners and education costs for students studying abroad.
The accused gang used a complex operation to evade supervision by the financial authorities. They reportedly purchased crypto in multiple countries and transferred the assets there digital wallets in South Korea, converted them into Korean won and diverted the money to various local bank accounts to further conceal their activities.
This move comes as South Korea is actively debating a new regulatory framework for its crypto market. Despite the growing popularity of digital assets as a communal investment among local households, authorities have recently intensified their surveillance of cryptocurrency transactions.
South Korea takes new regulatory steps
In a move towards more regulation, the government has unveiled plans to broaden regulations anti-money laundering (AML) framework and highlighted the implementation of the Travel Rule – a compliance measure that requires information sharing on crypto transfers, effective even for transactions under 1 million won (approximately $680).
In addition to addressing money laundering concerns, the South Korean government has outlined its economic growth strategy for 2026, which includes plans to introduce Bitcoin (BTC) exchange-traded funds (ETFs) this year.
This announcement marks a significant policy change as it is cryptocurrency-based exchange traded funds (ETFs) have been banned in South Korea since 2017.
Despite reaffirming its position in 2024, following the approval of similar products by the US Securities and Exchange Commission (SEC), the South Korean government has now pointed to the success of crypto funds in the US and Hong Kong as influencing factors for this change.
FSC Fast Tracks Stablecoin legislation
The country’s Financial Services Commission (FSC) will also accelerate the next phase of its digital asset legislation this quarter, aiming to provide a clear regulatory framework for stablecoins.
Although the second phase of the Virtual Asset User Protection Act has been delayed until early 2026 due to disagreements between the FSC and the Bank of Korea (BOK), important policy decisions have been made.
If reported by Bitcoinist, these include investor protection measures such as no-fault liability for cryptocurrency operators and safeguards that separate bankruptcy risks for issuers of stablecoins.
South Korea is also ready to lift its long-standing ban on institutional cryptocurrency trading, with the initiative expected to launch later this year. Reports suggest that the FSC could impose restrictions on corporate cryptocurrency investments, capping them at 5% of a company’s equity.
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